'90%' of advertisers are reviewing their programmatic ad contracts as they look for more transparency

A study from the World Federation of Advertisers (WFA) — a trade
body that represents brands such as P&G, L'Oréal, and
Emirates — found that nearly 90% of the advertisers it polled are
reviewing their programmatic advertising contracts and demanding
more control and transparency.

The WFA interviewed 59 of its members, who represent global ad
spend of more than $70 billion. Around 16% of their budgets are
spent on programmatic advertising, up from 10% in 2014.

Transparency in the programmatic advertising market has become a
hot topic in recent years, given concerns around bots, ad fraud,
and suppliers taking a "principle position," where they sell back
media they have bought directly from publishers at a marked-up
rate. Marketers are looking for reassurances that they are
getting the right value for their advertising spend and that
their programmatic suppliers are not taking too big a cut of
their budgets that could be better spent elsewhere.

"We call it media transformation, where we're seeing our members
in those media roles refreshing a lot of what they do. Part of
that is about transparency and part of that is about technology,"
said Matt Green, the WFA's global lead for research.

But while many clients are reviewing their programmatic spending,
Green explained the WFA was seeing many clients continue to use
agency trading desks. The study found 29% of respondents were
satisfied with the level of transparency offered by their agency
trading desk, up from 21% in 2014.

According to the report, use of private marketplaces, where
advertisers have a one-to-one relationship with a publisher, was
on the rise. 67% of the WFA members said they were investing more
into invite-only exchanges.

The survey also found that in-house trading desks were used by
one in five of the WFA members, something that was only being
conducted at the fringes of the WFA members two years ago.

P&G, a member of the WFA, is one of the big names to have
brought programmatic buying in-house. L'Oreal, another member of
the advertising organization, was reported by AdAge
to be investigating building its own trading desk.

A number of large technology companies are also moving into the
media buying space and providing software that enables
advertisers to manage their own media buying without having to go
through a middle man.

In 2016, German enterprise software company SAP launched the
media buying platform Exchange Media, which says on its
website that it enables "full transparency and simplified
processes that increase overall efficiency by facilitating a
unique direct real-time interoperation between advertiser and
publisher." Adobe's Marketing Cloud solution also enables
programmatic buying which it touts as a "truly transparent
system."

IBM has been using its artificial intelligence engine Watson to
more effectively target consumers and plan its own marketing
campaigns. Ari Sheinkin, VP of marketing analytics for IBM, told
Business Insider that Watson helped it reduce its cost per click
by 71% compared to its previous buying methods.

"Traditionally agencies use some mix of human intuition and
experience with algorithms and programs. The limitation of that
really has to do with the volume and velocity of data that's
involved," Sheinkin explained.

Sheinkin said that after having used Watson exclusively for IBM's
media campaigns the company is now presenting the product to
potential clients. Having come out of the testing stage, IBM is
now working on collaborations between its iX digital agency
division and using Watson for programmatic media buying.

While the report didn't name any agencies, the industry's largest
agency groups and agency trade body The 4A's denounced its
methodology and findings, arguing that the anonymous nature of
the findings had the potential to smear the perception of the
entire industry — including those not involved in such practices.